Performance Measures Report Card
|Financial indicator||2013 Finding||Change from 2012||2012 Finding|
Financial position per capita
|Operating surplus ratio|
|Receivables as % of taxes levied|
|Net financial assets|
|Net financial asset as % of own revenues|
|LIQUID ASSETS TO TOTAL RESERVES|
|Debt to total reserve ratio|
|Debt outstanding per $100 of Unweighted Tax assessment|
|Debt interest as a % of own source of revenues|
|Tax-based reserves and reserve funds|
|Operating reserves as % of own source of revenue|
|Capital reserve contributions as % of asset value|
|Capital reserve contributions to depreciation|
|Enterprise Reserve and reserve funds|
|OPERATING RESERVES AS % OF OWN SOURCE OF REVENUE|
|CAPITAL RESERVE CONTRIBUTIONS AS % OF ASSET VALUE|
|CAPITAL RESERVE CONTRIBUTIONS TO DEPRECIATION|
indicates to stay the course
indicates we are in the right range but may be moving in the wrong direction
indicates corrective action is necessary120 kB2013 Performance Measures Report Card – Printer friendly
Financial Position per Capita
This term refers to the remaining assets in excess of all liabilities compared to net surplus on a per capita basis. Positive balances indicate the City’s margin of safety it possesses to cover debt obligations and to have funds set aside for future sustainability. The City aims to be above the average per capita ratio as reported by the consulting firm BMA in the prior year. The City’s ratio increased in 2013 consistent with the BMA reported municipal average; the reason for this increase was lower than planned capital spending.
Operating Surplus Ratio
This ratio provides perspective on how much of the City’s own source of revenues were left after normal operations that could be used to fund reserves, repay debt and invest in capital projects. There was a negative trend from 2012 but the City was still above the targeted 5% ratio.
Receivables as % of taxes levied
Uncollected property taxes as a percentage of total taxes charged is a strong indication of the strength of the local economy and the ability of the community to pay their annual tax billings. The City continues to be well ahead of the average reported by consulting firm BMA of 6.4% in 2013 showing the City has great economic health and strong internal controls over tax collection.
Net financial assets
This ratio is an indicator of the City’s ability to repay liabilities at a point in time and is a useful trending tool. There was a slight decrease in this trend for 2013 indicating that the City created financial assets at a slower pace than it entered into liabilities. Movement of this ratio depends on the balance of financial assets compared to liabilities; cash and investment holdings play a significant role in this ratio. The reason for the decrease in 2013 was the increase in accounts payable at the end of the year associated with a number of contractual obligations that the City had entered into which will be repaid over the next few years.
Net financial asset as % of own revenues
Similar to the ratio as described above, this indicator is annualized by comparing the net financial asset position to current revenue and provides an additional level of understanding useful for trending analysis and financial monitoring. In 2013, the negative trend on this ratio warns that the City’s operating expenditures are increasing at a faster pace than net assets. The City should continue to consider this when building the 2015 budget to ensure revenues continue to match expenditures and reliance on reserves to fund operating expenditures is diminished.
Liquid assets to total reserves
As reserves are a critical component of the City’s long-term sustainability, there is an expectation that the amounts that are set aside in reserves are liquid and available for use when required. This ratio compares the cash and investment balances to the reserve and reserve fund balances and a ratio of less than 1 would suggest asset levels need to be monitored closely. The City continues to meet this target in 2013 and has a balanced approached to managing the cash and investment position, while considering the City’s current liabilities as well as its reserve and reserve funds.
Debt to Total Reserve ratio
This indicator provides a measure for financial prudence by comparing total debt to the total reserve balances. Generally, the benchmark suggested for this ratio is 1:1 or in other words, debt should not exceed total reserve and reserve fund balances. At the end of 2013, the City has met this standard and there was a significant strengthening of this ratio year over year due to the delay in debt issuance. It should be noted that planned debt issuances are not included in this calculation even though they have been approved in the capital budget. The positive result on this ratio is a strong indicator for assessing long-term sustainability and the ability to meet the City’s debt obligations.
Debt Outstanding per $100,000 of Unweighted Tax Assessment
This ratio shows total debt compared to the value of the unweighted tax assessment base and provides a fair basis to compare the City of Guelph debt to other municipalities. The target for this ratio is set at the average municipal rate as reported by BMA in the previous year. During 2013 the City is still outside this range, but has improved considerably since 2011 due to there being no debt issuance in 2012 or 2013. It should be noted that this indicator does not reflect the City’s ability to pay its debt obligations, but is merely a comparison to other municipalities on its debt load.
Debt interest as a % of own source revenues
This ratio indicates the extent to which the City’s own source revenues are committed to debt charges and again is a useful tool when comparing to other municipalities. Debt charges continue to be less than 2% of own source of revenues and fall within a normal level compared to other municipalities.
Operating reserves as % of own source of revenue
This indicator analyzes the health of the operating reserves by focusing specifically on the stabilization and contingency reserves compared to own revenues. The benchmark changed in 2011 to be 5%-10% rather than the 8% – 10% based on a review of what other municipalities and the Government Finance Officers Association (GFOA) suggests. Additionally, the City believes that 5% is more affordable and provides sufficient funds for an emergency situation. The City splits the presentation of these ratios to show the tax-based vs. non-tax supported ratios as this provides better information for planning purposes.
During 2013, there was a slight decline year over year on the tax-supported ratio although the balance is still approximately half of what is targeted. Given that it is still considerably under the target position and would not be sufficient to manage the impact of a significant emergency situation, staff has highlighted this as a ratio that needs attention and corrective action.
The non-tax supported contingency funds have met targeted levels in 2013.
Capital reserve fund contributions as % of asset value and % of depreciation
These two ratios provide insight on the level of reserve funding for future capital purposes compared to the total value of depreciable assets and to the current rate of depreciation. As a rule, the City should be at a minimum funding the capital reserves at the same amount as the annual depreciation expense and as a benchmark capital reserve contributions should approximately 2 to 3% of total asset value. These target rates will prevent sudden tax rate spikes by spreading the cost of infrastructure replacement over many years and provides prudent contingency capital funds for significant unexpected infrastructure expenses.
During 2013, the tax-supported capital contributions as a percentage of total assets and depreciation increased slightly year over year mostly due to the significant transfers to the capital reserves. The increase in contributions compared to depreciation has increased this target slightly, however it is still outside the benchmark range in 2013 and for this reason, a caution indicator has resulted.
For both ratios, the City continues to be on target and in a healthy range for annual contributions for capital infrastructure.